Help to Buy ISAs & Lifetime ISAs
When it was available – the Help to Buy ISA was a savings god-send for a generation of people desperate to own their first home. The government incentive encouraged thousands of people across the UK to start putting money away every month, with the promise of a bonus payout of up to £3,000 – what’s not to love?
Sure, the incentive carried a few restrictions. For instance – you can’t use the bonus for the initial deposit on a house or the required fees. Also, you can only buy a new-build house up to a certain value. But the pros really do outweigh the cons. Who doesn’t like free money?
Savers could claim their 25% bonus on a minimum saved amount of £1,600 (receiving £400 back) up to a total of £12,000 (which would return £3,000). Any additional savings can be kept in the tax-free account. However, the bonus will only be applied to the first £12,000.
There’s just one problem, the Help to Buy scheme has unfortunately come to an end, however, you now have access to the lifetime ISA which is a similar option.
What Is an ISA?
There are many different ways to save: bonds, limited access accounts, general savings accounts and Individual Savings Account (ISAs).
‘ISA’ is a term that’s thrown around a lot in the finance and banking worlds, as it’s a tax-free way to save a bit of money in the old piggy bank.
When you save money, most of the time, you’re rewarded with monthly or annual interest payments. They’re generally very low percentages of the total balance in the account, but they can still help to pad out your savings. After all – the more you save, the more you’ll get back in interest!
What many people don’t know is that you actually get taxed on the interest you earn, it might not be a huge amount, but it certainly starts to add up over time.
If you save in an ISA, you will benefit from TAX-FREE interest payments. As they say – every little helps!
Existing Help to Buy Accounts
Don’t worry – if you opened the account before the closing date, and you’re hoping to put a bit more away before you do eventually buy a house, existing accounts will be kept open for an additional 10 years. Up until November 2029, you WILL still be able to regularly save in your ISA. This is with the condition that the bonus is claimed before November 2030.
Buying a house is the dream for many people, and the ISA introduced a new incentive that enabled thousands of people to take out a mortgage. If you didn’t manage to open one, you can still utilise a lifetime ISA which pretty much works the same way.
The Lifetime ISA
The Help to Buy ISA came to an end to make room for a new product – the Lifetime ISA. This is a very similar savings scheme, designed to either help people get the money together for a deposit on their first house, or to squirrel away funds for later in their life.
The Lifetime ISA, affectionately referred to as LISA, also offers a 25% bonus. The catch is that you can only pay into it until you turn 50. You won’t be able to make any withdrawals UNLESS you buy your first house or cross the age threshold. It can be a great way to put money away to secure your future.
If you want to learn more about how the LISA works, you can do so below:
We all know that the government loves their tax, which is why there is a yearly savings limit applied to ISAs.
The limit has been the same over the years, the ISA allowance is/has been £20,000 per annum. It applies to the tax year, not the calendar year, which runs from April the 6th to April the 5th. If the allowance is ever due to change it’ll be outlined in the annual budget review.
This limit doesn’t apply to each individual ISA savings allowance though, it applies across every ISA you have. You can only add a total of £20,000 in new money to your ISAs throughout the tax year. However, this is still more than enough for most people.
Mortgages with Payday Loans & Bad Credit
More lenders are gradually becoming less concerned about payday loans on your credit history. What the lenders will essentially assess is how often you used a payday loan, how recent it was and how deep your issues have been using credit (if you’ve had any).
Acquiring a low rate mortgage with poor credit is somewhat harder, but still possible. Again, certain factors come into play here, similar to the above really – in terms of how they assess to lend to you. There are lenders in the market whom specialise in bad credit, but you’ve got to expect a higher rate of interest and fees, of course.
Make sure you do as much research as possible here (for both scenarios), compare your findings or even call a lender and ask as many questions as you can. The advisors lenders employ are trained to direct you as best as possible to ensure you make an informed decision.